Burke ChairIn Strategy

March 22, 2018

acordesman@

gmail.com

Anthony H. Cordesman

1616 Rhode Island Avenue NW

Washington, DC 20036

Anthony H. Cordesman

Phone: 1.202.775.3270

Email: acordesman@gmail.com

Web version:

www.csis.org/burke/reports

Stability in the MENA Region: The Range of Forces

Shaping Stability

Introduction

The Middle East has long been one of the most unstable regions in the world, and there are no present prospects for change in the near future. This instability is the result of ongoing conflicts and tensions, and a variety of political tensions and divisions. It also, however, is the result of a wide variety of long-term pressures growing out of poor governance, corruption, economic failures, demographic pressures and other forces within the civil sector.

The Short and Long Term Forces Shaping Stability and Instability

The immediate sources of instability are clear. Most of the region has some form of internal conflict, faces rising external threats, or is dealing with violent extremism. The violence and wars that have resulted from the political upheavals in 2011 will at best leave lasting challenges for unity and development even if the fighting ends. All of the major cause of violent extremism remain, and there are few prospects that the fight against ISIS will eliminate the extremist threat in even one MENA country. Tensions between Israel and the Palestinian each side has seen rising internal political barriers to a compromise peace and the tensions between Israel, Iran and Hezbollah are creating new military threats.

The longer term pressures are less clear, although a wide range of international organizations like the UN, World Bank, and IMF have warned about the individual forces involved for decades. Arab experts have documented the level of such pressures in the UN's Arab Development Reports since 2002, and many of the forces involved have consistent trends lines and can be quantified by country. These reports reveal radical differences between the countries in the region, but highlight the fact that given countries have mix of poor and abusive governance, ethnic and sectarian differences, corruption and self-seeking elites, poor or failed economic development, employment and career problems, and population pressures that challenge national unity and stability, and help lead to violent extremism.

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Taken together, it is clear that there is no simple way to model or predict the level of stability in any given country, much less the region. There are too many variables involved, and the variables differ so much between neighboring countries that focusing on one set of variables can at best describe the current situation in a single country not the situation in the Arab world or MENA region.

History has also made it all too clear that stability or instability can also change almost instantly because of the actions of a given figure or leader, personal tensions or ability to cooperate, ill-judged actions or interactions between given actors, outside intervention, success or failure in crisis management or warfare, and catalytic events that capture popular attention. The origins of the political upheavals and wars that began in 2011 are a key case in point.

Report on The Range of Forces Shaping Stability in the MENA Region

There are, however, a wide range of short and longer-term trends that can be analyzed, and many can be at least partially quantified. They provide a clear warning in many cases of the actions that governments must take to reduce the threat posed by given causes, and affect the society of each Arab and MENA country.

This analysis presents a summary presentation on the forces shaping stability and instability in the MENA region, and was prepared for the annual conference of the Arab Thought Foundation in Dubai on April 10-12, 2018. It addresses both the short-term causes of instability and the longer-term trends, and provides updated summary data on each Arab and Middle Eastern state where available.

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Table of ContentsKey Factors Shaping the Analysis, 7▪ The “Band of Instability”: Morocco to Iran, 8▪ Estimating Stability and Instability, 9▪ Key Causes of Instability, 10▪ Major Impacts to Date, 11

The Security Side of Instability, 12▪ The Cost of Conflict and Violent Extremism, 13▪ Wars with Lasting Stability and Development Impacts, 14▪ The Impact of War on Development: Syria, 15▪ The Impact of War on Development: Iraq, 16▪ Terrorism and Violent Islamic Extremism, 17▪ The Growing Global Impact of Islam: 2010-2050, 18▪ ODNI Map of Sunni Violent Extremist Operating Areas in 2017, 19▪ MENA and Nearby Areas Where U.S. Forces Have CT Mission, 20▪ Arab World Terrorist Attacks vs. Rest of World, 21▪ Terrorist Attacks in MENA 2001-2016, 22▪ High Lethality in Arab Terrorism, 23▪ Four of Ten Leading Countries are Arab, Eight are “Islamic”, 24▪ Four of Five Leading Perpetrators are Arab, 25▪ Costly Wars and Arms Races, 26▪ IISS Estimate of 2017 Global Military Spending, 27▪ Comparative Military and Security Spending in 2017, 28▪ Excessively Large National Security Forces, 29▪ IISS Estimate of Real Change in MENA

Military Spending 2016-2017, 30▪ Ethnic, Sectarian, Tribal, and Regional Differences, 31▪ Sectarian/Ethnic/Tribal/Regional Divisions, 32▪ Key Analytic Issues, 33▪ Sectarian Divisions in MENA, 34▪ Ethnic Divisions in MENA, 35▪ Broader “Kurdish Problem”, 36

The Civil Side of Instability, 37▪ Key Civil Causes of Instability, 38▪ Civil Challenges to Stability, 39▪ Some Uncertain Polling Indicators, 40▪ Perceptions of National Challenges, 41▪ Arab Youth: Negative Views of ISIS: 2015, 42▪ Lack of Youth Employment Opportunities,43▪ Lack of Youth Employment Opportunities Pt 2, 44▪ Secularism vs. Religion vs. “Justice” vs.

Other Ideological Issues, 45▪ Support for Making Sharia the Official law by Country, 46

Governance and Corruption, 47▪ Governance, Corruption, Rule of Law, Repression, 48▪ UN HDI Index: Rankings by Country, 2016, 49▪ World Bank Rating of Governance in Entire MENA Region,

50▪ Government Effectiveness and Failed Secularism, 51▪ Government Effectiveness and Failed Secularism Pt 2, 52▪ Uncertain Governance, 53▪ Corruption Perceptions Ranking in 2016, 54▪ Rigid and/or Repressive Regimes; Lack of

Peaceful Civil and Political Alternatives, 55▪ Political Stability/ Less Violence in 2016, 56▪ Rule of Law MENA Region, 2016, 57

Economics and Unemployment, 58▪ Key Economic Causes of Instability, 59▪ GDP by Country, MENA Region in 2017, 60▪ GDP Per Capita Estimates: MENA Region, 61▪ GNI per Capita PPP terms, MENA Region, 62▪ Key Economic Pressures, 63

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Table of ContentsOver-Dependence on Petroleum Exports, 91▪ The OPEC Disease and the Illusion of Oil Wealth, 92▪ Total Petroleum Export Revenues Sub section, 93▪ The Real World Limits to Oil Wealth, 94▪ The Oil Shock in 2012-2016, 95▪ The Limits to “Oil Wealth:” Per Capita Net Oil Export Income

and the Oil Shock in 2012-2016 , 96▪ Non-Petroleum GDP Per Capita Income, 97

Other Slides, 98▪ GDP per Capita MENA Region in 2017, 99▪ Public Sector Bias in Seeking Employment, 100▪ Perceptions of Quality of Life and Governance, 101▪ Detailed Population Trends, 102

▪ Key Missing Index: Gini Index, 64▪ Percentage of Population Dissatisfied with Standard of Living, 65▪ Excessive Public Sector Employment, 66▪ Lag in Employment and Cause, 67▪ Rankings: Ease of Doing Business MENA Region, 2017, 68▪ The Expatriate Challenge, 69

Population Pressure and the “Youth Bulge”, 70▪ Demographic Pressures, 71▪ The Global Impact of Islam: 2010-2050, 72▪ MENA Population (Thousands) 1950 – 2050, 73▪ Demographic Pressure in North Africa 1950-2015, 74▪ Demographic Pressure in Arab-Israeli Countries: 1950-2050, 75▪ Demographic Pressure in Gulf Countries: 1950-2050, 76▪ Youth Bulge and Employment, 77▪ Total and Youth Unemployment Rates by Region Before 2011, 78▪ Comparative Arab Youth Unemployment, 79▪ The “Youth Bulge”, 80▪ The Shape of Things to Come – for the Next Decade, 81▪ Dependency Ratio, by country, MENA region, 2015, 82▪ Potential Support Ratio, by country, MENA region, 2015, 83

Major Pressures for Social Change, 84▪ Social Change, Hyperurbanization, Media, Education, 85▪ Key Drivers, 86▪ Growing Hyper Urbanization: 1950-2030, 87▪ Percentages of Urbanization in MENA Region, 2017, 88▪ Internet Users in Middle East, by Country, 2017, 89▪ Digital Penetration in the MENA Region: 2012, 90

Additional Reports and References

The reader should be aware that The Burke Chair at CSIS, working with Dr. Abdullah Toucan, has addressed these causes of instability in more depth in a number of prior reports. Two have examined the ability to model and quantify key trends in depth:

• Stability in the MENA Region: Beyond ISIS and War, Volume One: Regional Trends April 2016, a comparative survey of the key quantitative civil factors and trends shaping stability and instability in the region. This volume is available on the CSIS website at http://csis-prod.s3.amazonaws.com/s3fs-public/160419_MENA_Stability_II_Country_01.pdf.

• Stability in the MENA Region: Beyond ISIS and War, Volume Two: Country-by-Country Trends, April2016: a country-by-country risk assessment and survey of the key quantitative civil factors and trends shaping stability and instability in the region. This volume is available on the CSIS website at http://csis-prod.s3.amazonaws.com/s3fs-public/160419_MENA_Stability_I_Regional_0.pdf.

A third report provides a set of comparisons of each MENA country flagging both key areas of risk and major gaps or problems in international and national reporting:

• Instability in the MENA Region, Afghanistan, Pakistan, and Key Conflict States: A Comparative Score Card, 2017: Seven tables that compare a range of key measures of stability in all MENA states, and nearby conflict states. This volume is available on the CSIS website at: https://www.csis.org/analysis/instability-mena-region-afghanistan-pakistan-and-key-conflict-states-comparative-score-card

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Key Factors Shaping

the Analysis

7

The “Band of Instability”: Morocco to Iran

Source: https://www.google.com/search?q=Map+of+MENA+region&tbm=isch&imgil=znXk0x3W7G3aHM%253A%253BoqWD05Q7VHfgOM%253Bhttp%25253A%25252F%25252Fwww.slideshare.net%25252FPresentationsat24point0%25252Fmap-of-mena-14114848&source=iu&pf=m&fir=znXk0x3W7G3aHM%253A%252CoqWD05Q7VHfgOM%252C_&usg=__5ll59zZ6D6o1QcBGWeSGl21ElKc%3D&biw=1267&bih=986&ved=0ahUKEwjSyNj-7rjLAhXKej4KHStICX4QyjcIJg&ei=RtniVtKNB8r1-QGrkKXwBw#imgdii=HnVYveGk_iZYSM%3A%3BHnVYveGk_iZYSM%3A%3BIJsQZYoHG_igAM%3A&imgrc=HnVYveGk_iZYSM%3A.

Note that some experts include Turkey, Somalia, and the Sudan

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Estimating Stability and Instability

• Largely an “Arab” and Muslim Region. But, national differences outweigh common cultural and religious identity.

• No clear path to predicting shape of future unrest and conflict.

• Long list of underlying causes in terms of population pressures, governance, weak economic developments outlined in Arab Development reports from 2002 onwards.

• Experts differ sharply on impact and ways to weight importance of given problems.

• Sharp gaps and differences in the data.

• Cannot easily quantify politics, leadership, extremism, ideology.

• Poll’s help, but limited.

• Instability probably shaped as much by perceptions and expectations as quantifiable forces.

9

Key Causes of Instability,

But Vary Sharply by Nation

• Recent wars and their cumulative cost, impact of 2011 upheavals, tensions between Iran and Arab states.

• Internal security issues: Violent extremism plus Sectarian, ethnic, tribal, other internal divisions.

• Local conflicts, arms races, use of proxies, struggles for regional influence.

• Impact of outside powers.

• Poor governance, corruption, cronyism, repression

• Failure of Arab socialism, rise of religious extremism,

• High population growth, “youth bulge and unemployment,” inadequate infrastructure, housing and services.

• Long history of inadequate development and economic growth, state-driven barriers.

10

“Post 1991/2003/2011:” Major Impacts to Date

• Boom and Bust in Petroleum Export Revenues: Algeria, Libya, Egypt, Syria, Lebanon, Iraq, Bahrain, Kuwait, Oman, Qatar(?), Saudi Arabia, UAE, Yemen

• High Levels of Islamic Extremist Violence/Threat: Algeria (?), Libya, Egypt, Syria, Iraq, Saudi Arabia, Yemen

• Political Instability/War Critically Impact or Cripple Economy, Governance, National Development: Libya, Tunisia, Egypt, Palestinians, Lebanon, Syria, Jordan (?) Iraq, Iran, Bahrain, Yemen

• Continued/Worsened Failure to Create, Fund, and Implement an Effective Development Plan for Economy and Governance, and Meet Job Creation needs: All regional states, but Kuwait, Qatar and UAE partially exempt.

• Iran vs. Divided Arab World and/or Unaffordable Arms Races: Algeria, Egypt, Israel, Lebanon, Syria, Iraq, Jordan (?), Saudi Arabia, UAE, Oman, Kuwait, Qatar (?) Yemen

• Illusory Arab Alliances, Collapse of GCC: Egypt looks inward, Iraq & Syria civils wars, Saudis/UAE/Bahrain vs Qatar, marginalize Oman and Kuwait.

• Sectarian, Ethnic, Tribal Crisis Worsens: Libya, Egypt, Israel/Palestinians, Lebanon (?), Syria, Jordan (?), Iraq, Iran, Bahrain, Saudi Arabia, Yemen

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The Security Side of

Instability

12

The Cost of Conflict and Violent Extremism

Arab Development Report 2016, p. 177 13

Wars with Lasting Stability and Development Impacts

• Morocco: Polisario, impact on South and Budget

• Algeria: residual impacts of 1991-1997 (present) civil war, Polisario

• Libya: Ongoing civil war, residual ISIS, major development barriers since 2011

• Egypt: Sinai war. Impact of tourism, military spending, development.

• Palestinian-Israel: Gaza development crippled, West Bank insecure, limited growth, violence in Israel; Impact on Israeli-Arab military spending

• Lebanon: Residual investment and development impacts. Hezbollah vs. Army, border clashes

• Syria: Crippled development since 2011, 500,000 dead. 40% of population IDPs and refugees at some point. Lasting tensions and divisions. $88.5+ billion in recovery in 2016, decade or more to restore development track.

• Iraq: Crippled development since at least 1984. 15% of population IDPs and refugees at some point. Lasting tensions and divisions. $100+ billion in recovery in 2017, decade or more to restore development track.

• Bahrain: Steadily growing development and unity problems with Sunni vs. Shi’ite divisions

• Yemen: Failed development before war. Crippled since 2015. All of population affected by fighting, embargos, bombings. No clear recovery options.

14

The Impact of War on Development: Syria(GDP growth rate 2005–2013 in crisis and continuing scenarios (constant prices

2000)

Arab Development Report 2016, p. 175; UNHCR, as of 17.12.17; http://www.unhcr.org/en-us/syria-emergency.html, 17.3.18

500,000 dead5.4 million refugees13.1 million in need inside6.1 million internally displaced2.98 million in displaced, hard to reach areas.Key medical, education, food security issues

15

The Impact of War on Development: Iraq(Total accumulated losses in GDP because of terrorism, Iraq, 2005–2014 )

Arab Development Report 2016, p. 175; UNHCR, as of 17.12.17; http://www.unhcr.org/en-us/syria-emergency.html , Iraq Body Count

180,00-203,000 dead as of 2.17280,000 refugees685,000 in need inside2.1 million internally displaced2.98 million in displaced, hard to reach areas.Key medical, education, food security issues

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Terrorism and Violent Islamic Extremism

• Every country in region still faces some form of threat.

• Most countries have seen deterioration in internal conditions and potential causes since 2011. Cuts in petroleum export revenues have affected even “wealthy exporting states.

• Violence/threat particularly high in Algeria Libya, Egypt, Israel, Syria, Iraq, Bahrain, Saudi Arabia, Yemen

• Break up of Caliphate does not remove many fighters, affiliates, or address causes.

• Every country in region still faces some form of threat.

• Violence/threat particularly high in Algeria Libya, Egypt, Israel, Syria, Iraq, Bahrain, Saudi Arabia, Yemen

• Break up of Caliphate does not remove many fighters, affiliates, or address causes.

• Growing global impact of active Islam ensures growth of extremist minority

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The Growing Global Impact of Islam: 2010-2050

Source: the Pew Research Center, The Future of World Religions: Population Growth Projections, 2010-2050, April 2, 2015, http://www.pewforum.org/2015/04/02/religious-projections-2010-2050/. 184/8/2018

ODNI Map of Sunni Violent Extremist Operating

Areas in 2017

U.S. Office of the Director of National Intelligence (ODNI), https://www.dni.gov/files/documents/Newsroom/Testimonies/2018-ATA---Unclassified-SSCI.pdf 19

MENA and Nearby Areas Where U.S. Forces Have

Counterterrorism Mission

Costs of War Project at Brown University’s Watson Institute for International and Public Affairs http://www.tomdispatch.com/images/managed/costofwar_projectmap_large1.jpg 20

Arab World Terrorist Attacks vs. Rest of World

Arab Development Report 2016, p. 172

Well over 60% of those killed worldwide are the result of Muslims killing Muslims. Over 85% in Arab world.

21

Terrorist Attacks in MENA 2001-2016

START Data Base, http://www.start.umd.edu/gtd/search/; accessed 18.3.18

Total of 36,857 incidents

• 37% of global total of 98,773.

• 45% of total of 81,234 in largely Islamic regions in MENA, Sub-Saharan Africa, Central Asia, and South Asia, Africa

• Numbers so low only because do not count most war casualties

22

High Lethality in Arab Terrorism(Terrorist attacks and their victims in the Arab region versus the rest of the world,

2000–2014 )

Arab Development Report 2016, p. 38 23

Four of Ten Leading Countries are Arab, Eight are

“Islamic”

State Department Annual Country Reports on Terrorism, April 30, 2017, https://www.state.gov/j/ct/rls/crt/2016/index.htm, p. 14;

START data base, accessed 2.18.18 24

Four of Five Leading Perpetrators are Arab

State Department Annual Country Reports on Terrorism, April 30, 2017,

https://www.state.gov/j/ct/rls/crt/2016/index.htm, p. 14; START data base, accessed 2.18.18

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Costly Wars and Arms Races

• Morocco-Algeria over Polisario?

• Residual impact of Arab-Israeli arms races.

• Egypt in Sinai/Gaza (Israel?)

• Syria: Internal, Iran, Hezbollah, U.S./allies, Turkey, Russia, Arab states

• Iraq: Internal, Iran, U.S., Turkey

• Divided Arab world vs. Iran: Nuclear, conventional missile, asymmetric naval/missile/air, regional influence

• Qatar vs. Saudi Arabia, UAE, Bahrain

• Yemen: UAE, Saudi Arabia, Iran

• “Glitter Factor,” Toys for the Boys”26

IISS Estimate of 2017 Global Military Spending

Source: IISS, Military Balance, 2018, p. 194/8/2018 27

Comparative Military and Security Spending in 2017: (ISIS Estimate in Current $US Billions)

. Source: Adapted by the author from IISS, Military Balance 2017, Chapter Seven, “The Middle East and North Africa.”. No data available for Qatar, Libya, UAE, and Syria

28

Mauritania Tunisia Bahrain Jordan Lebanon Egypt Morocco Kuwait Oman Algeria Iran Israel Iraq Saudi Arabia

* 0.142 0.826 1.48 1.63 1.87 2.67 3.49 5.71 8.69 10 16 18.5 19.3 76.7

0

10

20

30

40

50

60

70

80

90

Excessively Large National Security Forces: (Military Spending As % of GDP)

Note: Syria, and Yemen are at war and no estimate is possible, but must exceed 8%. NATO goals is 2%. U.S. is 3.26%, Russia is 3.68%, Chia is 1.27%. Source: Adapted by the author from IISS, Military Balance 2018, Chapter Seven, “The Middle East and North Africa.”.

29

Egypt Tunisia Mauritania Morocco Lebanon Iran Jordan Bahrain Kuwait Israel Algeria IraqSaudi

ArabiaOman

% GDP 1.36 2.46 2.86 3.15 3.54 3.75 4.04 4.37 4.83 5.33 5.71 10 11.3 12.08

0

2

4

6

8

10

12

14

• NATO goal is 2%

• U.S. is 3.26%,

• Russia is 3.68%,

• China is 1.27%.

IISS Estimate of Real Change in MENA

Military Spending 2016-2017

Note: IISS warns that country reporting is often partial or inaccurate, generally sharply under reportingSource: IISS, Military Balance, 2018, p. 319-320

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Ethnic, Sectarian, Tribal, and Regional Differences

• Deep and growing divisions at sectarian extremes, Sunni and Shi’ite.

• Mixed national records in both correcting historical problems and offering clear path of hope for the future.

• Tensions made worse by resource and demographic pressures.

• Tribal, sectarian, ethnic, and linguistic differences tend to cluster, and reflect government favoritism and wealth/income differences.

• Hyperurbanization interacts with major economic modernization problems in agricultural and rural sectors

• Violent extremism feeds on these differences.31

Sectarian/Ethnic/Tribal/Regional Divisions

• Berbers? Algeria, Libya

• Egypt: Copts

• Lebanon: Maronite, Sunni, Shi’ite, other Confessions

• Syria: Alawite, Shi’ite, Sunnis, Kurds, minorities

• Jordan: Jordanians, Palestinians, Refugees

• Iraq: Sunni, Shiite, Arab, Kurds, minorities

• Iran: Persian, Arab, Baluchi, Kurds, Shiite, Sunni

• Bahrain: Sunni, Shi’ite

• Saudi Arabia: Sunni, Shi’ite

• UAE, Kuwait: Iranians/Persians

• Yemen: Shi’ite divisions, Sunnis; North vs. South

• Foreign Workers? Refugees?

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Key Analytic Issues

• Maps and data generally badly outdated, often guesstimates made without a meaningful census or sampling.

• Urbanization, rising population density, recent civil conflicts and wars combined to break up traditional patterns, increase tension and conflict.

• Most states conceal or deny to a major extent.

• Few efforts to measure levels of discrimination, poll attitudes of affected groups.

• Key aspects of discrimination: Political power, role in governance and security forces, economics, de facto segregation and security barriers, career opportunities and wages rarely measured.

• Little analysis of broad patterns of crime, violence, demonstrations, “incidents”.

• “Terrorism” rarely tied to identify of perpetrators and target.

33

Sectarian Divisions in MENA

http://www.nytimes.com/interactive/2016/01/04/world/middleeast/sunni-shiite-map-middle-east-iran-saudi-arabia.html?_r=04/8/2018 34

Ethnic Divisions in MENASource: gulf2000.columbia.edu; https://www.google.com/search?q=Population+density+map+of+MENA+region&tbm=isch&imgil=pl5o89pRKnk_hM%253A%253B5YCjfhMj-iyu8M%253Bhttp%25253A%25252F%25252Fgulf2000.columbia.edu%25252Fmaps.shtml&source=iu&pf=m&fir=pl5o89pRKnk_hM%253A%252C5YCjfhMj-iyu8M%252C_&biw=1430&bih=953&usg=__gzSbz4AA_tCEor43fQK7UMeybaE%3D&ved=0ahUKEwjhyMi0it7KAhXIth4KHfi8DrYQyjcIKQ&ei=NkCzVuHVKMjtevj5urAL#imgrc=pl5o89pRKnk_hM%3A&usg=__gzSbz4AA_tCEor43fQK7UMeybaE%3DEthnic Divisions

in MENA4/8/2018 35

Broader “Kurdish Problem”

Source: Source: Atlas-Syria: Federal Ministry of the interior, Republic of Austria, 2015, http://www.ecoi.net/atlas_syria.pdf, p. 16

36

The Civil Side of

Instability

37

Key Civil Causes of Instability

• Authoritarianism, repression, discrimination

• Poor governance and corruption

• Religion, ideology

• Lack of effective development, excessive state and governance sectors.

• Poor income distribution, low incomes, poverty.

• Population pressure, urbanization, youth bulge, dependency ratio burdens.

• Lack of real career opportunities, equity, cronyism and nepotism.

• Catalytic incident or crisis. Impact of conflict or political crisis.

38

Civil Challenges to Stability

• Rigid and/or Repressive Regimes; Lack of Peaceful Civil and Political Alternatives.

• Problems with Security Forces Police and Rule of Law.

• Ethnic, Sectarian, Tribal, and Regional Differences.

• Major Demographic Pressures – Youth Bulge.

• Social Change, Hyperurbanization, Media, Education

• Economic Pressures.

• Uncertain Governance: Services, Education, Health, Utilities (power, water, sewers/garbage)

• Secularism vs. Religion vs. “Justice” vs. Other Ideological Issues

39

Some Uncertain Polling Indicators

• Limited sampling of countries sharply distorts results of many surveys. Worst rated or more unstable countries often are not polled.

• Employment, career opportunities, merit based hires and promotion are primary concern in many polls.

• Corruption a key popular concern, but involves “dignity,” “justice” in moral as well as legal sense, belief governments have failed to pursue Islamic values.

• Governance only one of many concerns, but lack of warning of a sudden wave of unrest reflects government’s failure to listen and respond far more than a lack of warning indicators.

• Some surveys show fear of physical security varies far more sharply over time than broad concerns with governance and economy.

• Violent, armed, extremists, demagogues, ideologues, charismatic hard to poll.

40

Perceptions of National Challenges(What are the most important challenges your country is facing today (%)?)

Arab Development Report 2016, p. 26 41

Arab Youth: Negative Views of ISIS: 2015

Arab Development Report 2016, p. 38 42

Lack of Youth Employment

Opportunities is Key Base for Extremist

Recruiting - I

Source: adapted from: INSIDE THE HEARTS AND MINDS OF ARAB YOUTH 8TH ANNUAL ASDA'A BURSON-MARSTELLERARAB YOUTH SURVEY, “White Paper,” http://www.arabyouthsurvey.com/uploads/whitepaper/2016-AYS-White-Paper-EN_12042016100316.pdf, p. 13. Conducted by PSB to explore attitudes among Arab youth in 16 countries in the Middle East and North Africa. PSB conducted 3,500 face-to-face interviews from January 11 to February 22, 2016 with Arab men and women in the age group of 18 to 24. The interviews were completed inArabic and English. The aim of this annual Survey is to present evidence-based insights into the attitudes of Arab youth, providing public and private sector organizations with data and analysis to inform their decision-making and policy formation.The Survey covered the six Gulf Cooperation Council states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE), Algeria, Egypt, Iraq, Jordan, Lebanon, Libya, Morocco, Palestine, Tunisia and Yemen. The Survey did not include Syria due to the civil unrest in the country.

43

Lack of Youth Employment Opportunities is

Key Base for Extremist Recruiting - II

Source: adapted from: INSIDE THE HEARTS AND MINDS OF ARAB YOUTH 8TH ANNUAL ASDA'A BURSON-MARSTELLERARAB YOUTH SURVEY, “White Paper,” http://www.arabyouthsurvey.com/uploads/whitepaper/2016-AYS-White-Paper-EN_12042016100316.pdf, p. 13. Conducted by PSB to explore attitudes among Arab youth in 16 countries in the Middle East and North Africa. PSB conducted 3,500 face-to-face interviews from January 11 to February 22, 2016 with Arab men and women in the age group of 18 to 24. The interviews were completed inArabic and English. The aim of this annual Survey is to present evidence-based insights into the attitudes of Arab youth, providing public and private sector organizations with data and analysis to inform their decision-making and policy formation.The Survey covered the six Gulf Cooperation Council states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE), Algeria, Egypt, Iraq, Jordan, Lebanon, Libya, Morocco, Palestine, Tunisia and Yemen. The Survey did not include Syria due to the civil unrest in the country.

A quarter (24 per cent) of Arab youth believe that lack of jobs and opportunities for young people is one of the primary reasons why some are attracted to Daesh. Interestingly, one in four (25 per cent) do not understand why anyone would want to join the militant group.Other specific reasons as to why some young people are attracted to Daesh included “the belief that their interpretation of Islam is superior to others” (18 per cent), “religious tensions between Sunnis and Shias” (17 per cent) and “the rise of secular Western valuesin the region” (15 per cent).

Concern about lack of job opportunities remains an issue across the 16 countries polled with fewer than half (44 per cent) agreeing with the statement that there are good job opportunities in the areas they live in.That concern is particularly high in those countries where Daesh has actively recruited young people. Just 2 per cent of young Yemenis,

7 per cent of Libyans, 20 per cent of Palestinians, 21 per cent Lebanese, 28 percent of Tunisians, and 39 per cent of young Iraqis believe they have good job opportunities available to them in their country.

Job opportunities remain a major issueacross the Arab world with one in four 15-24 year olds unemployed, the highest youth unemployment rate in the world, accordingto the World Bank.

44

Secularism vs. Religion vs. “Justice” vs.

Other Ideological Issues

Turn to religion in activist faith where legitimacy of given belief structures often emerges as key issue.

Failure of secular options: practical and ideological.

Reinforced by combination of repression, economic pressure, youth bulge.

Religious extremism at some level affects all faiths, as does issue of historical legitimacy.

Building on other sources of violence: Arab-Israeli issue, local conflicts, Iraq, counterterrorism.

Uncertain role of education and clergy.

“Justice” issue.45

The Broader Impact of Islam: Support for

Making Sharia the Official law by Country

(http://www.pewresearch.org/fact-tank/2015/11/17/in-nations-with-significant-muslimpopulations- much-disdain-for-isis/); http://www.pewresearch.org/fact-tank/2015/12/07/muslims-and-islam-key-findings-in-the-u-s-and-around-the-world/.

Recent surveys show that most people in several countries with significant Muslim populations have an unfavorable view of ISIS, including virtually all respondents in Lebanon and 94% in Jordan.

Relatively small shares say they see ISIS favorably. In some countries, considerable portions of the population do not offer an opinion about ISIS, including a majority (62%) of Pakistanis. Favorable views of ISIS are somewhat higher in Nigeria (14%) than most other nations. Among Nigerian Muslims, 20% say they see ISIS favorably (compared with 7% of Nigerian Christians). The Nigerian militant group Boko Haram, which has been conducting a terrorist campaign in the country for years, has sworn allegiance to ISIS...

More generell, Muslims mostly say that suicide bombings and other forms of violence against civilians in the name of Islam are rarely or never justified ...,including 92% in Indonesia and 91% in Iraq. An additional 7% say suicide bombings are sometimes justified and 1% say they are often justified in these circumstances.

In a few countries, a quarter or more of Muslims say that these acts of violence are at least sometimes justified, including 40% in the Palestinian territories, 39% in Afghanistan, 29% in Egypt and 26% in Bangladesh.

In many cases, people in countries with large Muslim populations are as concerned as Western about the threat of Islamic extremism, and have become increasingly concerned in recent years. About two-thirds of people in Nigeria (68%) and Lebanon (67%) said earlier this year they are very concerned about Islamic extremism in their country, both up significantly since 2013.

4/8/2018 46

Governance and

Corruption

47

Governance, Corruption, Rule of Law, Repression

• Many MENA countries set low standards.

• Polls show that employment and “corruption” are the greatest single causes of popular discontent.

• “Corruption” often broadly seen as any form of abuse of power and privilege.

• Sudden rises in instability, however, are often triggered by incidents that catalyze broad popular action and/or by violent and highly motivation minorities.

• Security force abuses tend to be relatively narrowly based and targeted. Do not poll realistically.

• True poverty is forced to work. Discontented middle class/ideologues often lead initially. Replaced by mass, extremists, demagogues.

48

Israel QatarSaudi

ArabiaUAE Bahrain Kuwait Oman Iran Lebanon Algeria Jordan Tunisia Libya Egypt Iraq

Morocc

oSyria Yemen

Afghani

stan

* 0.899 0.856 0.847 0.84 0.824 0.8 0.796 0.774 0.763 0.745 0.741 0.725 0.716 0.691 0.649 0.647 0.536 0.482 0.479

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

UN Human Development Index:

Rankings by Country, 2016

Data Source: UN Human Development Report 2017 (provides 2016 rankings)

http://hdr.undp.org/en/countries49

World Bank Rating of Governance in Entire

MENA Region

50

Source: Kaufmann D., A. Kraay, and M. Mastruzzi (2010), The Worldwide Governance Indicators: Methodology and Analytical Issues The Worldwide Governance Indicators are available at: www.govindicators.orgNote: The Worldwide Governance Indicators (WGI) are a research dataset summarizing the views on the quality of governance provided by a large number of enterprise, citizen and expert survey respondents in industrial and developing countries. These data are gathered from a number of survey institutes, think tanks, non-governmental organizations, international organizations, and private sector firms. The WGI do not reflect the official views of the World Bank, its Executive Directors, or the countries they represent. The WGI are not used by the World Bank Group to allocate resources.World Bank, World Wide Governance Indicators, Syria: http://info.worldbank.org/governance/wgi/index.aspx#reports.

Violence

4/8/2018

Israel UAE Qatar Bahrain Oman Jordan Tunisia KuwaitMorocc

oLebano

nSaudiArabia

Iran Syria Egypt Algeria Yemen Iraq LibyaAfghani

stan

Gov Effectiveness 87.20 81.99 75.36 68.72 63.03 58.77 55.92 55.45 48.34 45.97 44.08 41.23 38.39 35.55 35.07 12.32 10.43 7.11 4.74

0

10

20

30

40

50

60

70

80

90

100

Government Effectiveness and Failed

Secularism (Pre- “Arab Winter” 2011)

Lower ranking = less effective government

51(Data Source: World Bank Governance Indicators 2014)

http://databank.worldbank.org/data/reports.aspx?source=worldwide-governance-indicators

52(Data Source: World Bank Governance Indicators 2016)

http://databank.worldbank.org/data/reports.aspx?source=worldwide-governance-indicators

Government Effectiveness and

Failed Secularism: 2016

UAE Israel Qatar BahrainSaudi

ArabiaOman Jordan

Morocc

oKuwait Iran Tunisia Lebanon Algeria Egypt Iraq Yemen Syria Libya

* 90.87 88.94 74.52 65.87 63.46 61.45 58.65 50.96 46.63 45.67 45.19 35.58 35.1 27.88 9.13 2.4 1.92 1.44

0

10

20

30

40

50

60

70

80

90

100

Lower ranking = less

effective government

Uncertain Governance: Education, Health, Utilities, Housing, Infrastructure, etc.

• State sector lacks efficiency, integrity.

• Government services do not keep up with either rising population or expectations.

• Key infrastructure failings, particularly in urban periphery and slums and rural areas.

• Oil wealth is relative and often poorly allocated.

• Broad perception that governments are corrupt, unjust, and driven by selfish elites.

• Gap between intentions and execution.

• Perceived favoritism by crony, ethnicity, sect, tribe, faction, and area.

53

Qatar UAE Israel JordanSaudiArabia

Oman Bahrain Kuwait Tunisia Morocco Egypt Algeria Iran Lebanon IraqAfghanis

tanYemen Libya Syria

* 22 23 28 57 62 64 70 75 75 90 108 108 131 136 166 169 170 170 173

0

20

40

60

80

100

120

140

160

180

200

Tran

spar

ency

Inte

rnat

ion

al C

orr

up

tio

n P

erce

pti

on

Ind

ex, 2

01

5(R

anke

d 0

-17

7, f

rom

leas

t to

mo

st c

orr

up

t)

Transparency International Corruption Perceptions

Ranking in 2016 (Out of 177 Countries)

Transparency International Corruption Perceptions Index “The Corruption Perceptions Index ranks countries and territories based on how

corrupt their public sector is perceived to be.” 54Transparency International, Global Corruption Index 2016, http://www.transparency.org/research/gcb/, Accessed March 19, 2018

Rigid and/or Repressive Regimes; Lack of Peaceful Civil and Political Alternatives

• Democracy and freedom of expression are only one set of issues.

• Elitism, corruption, concentration of wealth, failures personal security, government services are critical.

• So are:

• Lack of proper training and equipment at all levels of police and justice system, grossly inadequate pay.

• Favoritism, cronyism, oligarchy, age.

• Misuse of courts, police, and security services.

• Misuse of detention, confessions-based justice, extreme interrogation.

• Restrictions on freedom of expression and travel.

• Failure to fund key governance: Services, Education, Health, Utilities (power, water, sewers/garbage)

55

Syria Yemen Iraq LibyaLebano

nEgypt Algeria Tunisia Bahrain Iran Jordan

SaudiArabia

Morocco

Kuwait UAE Oman Qatar

* 0 0.48 3.33 3.81 8.1 9.05 11.43 13.33 18.1 20.48 26.67 28.57 35.71 41.43 60.95 71.9 76.19

0

10

20

30

40

50

60

70

80

Political Stability/ Less Violence in 2016

(by world percentile)

Source: World Bank Governance Indicators, 2016

http://databank.worldbank.org/data/reports.aspx?source=worldwide-governance-indicators 56

UAE QatarSaudi Arabia

Bahrain Oman Jordan Kuwait Tunisia Morocco Egypt Iran Algeria Lebanon Yemen Iraq Libya Syria

* 79.81 79.33 67.79 66.35 65.38 62.02 56.73 55.77 49.04 35.58 25.96 19.23 18.75 4.81 2.4 1.44 0.96

0

10

20

30

40

50

60

70

80

90

Source: World Bank Governance Indicators, 2016

http://databank.worldbank.org/data/reports.aspx?source=worldwide-governance-indicators

Rule of Law MENA Region, 2016(by World Percentile)

57

Economics and

Employment

58

Key Economic Causes of Instability

• Impact of poor governance and corruption

• State barriers to economic progress, doing business.

• Lack of effective development, excessive state and governance sectors with gross overemployment

• Poor income distribution, low incomes, poverty.

• Population pressure, urbanization, youth bulge, dependency ratio burdens.

• Unemployment and disguised (non-productive, low paid) unemployment.

• Lack of real career opportunities, equity, cronyism and nepotism.

• Catalytic incident or crisis. Impact of conflict or political crisis.

59

GDP by Country, MENA Region in 2017

(PPP purchasing power parity, $US millions )

Saudi

ArabiaIran Egypt UAE Iraq Algeria Qatar Kuwait Morocco Oman Tunisia Jordan Lebanon Bahrain Yemen Libya Syria

CIA 1,789, 1,631, 1,199, 691,90 660,70 629,30 341,70 302500 300,10 187,90 135,90 89,050 87,890 69,770 68,950 63,140 50,280

WB 1,756, 1,601, 1,064, 671,11 645,42 609,63 327,55 300,96 281,42 0 132,22 85,553 85,947 0 69,166 0 0

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

$US M

illio

ns

CIA WB

Various data estimates unavailable for Bahrain, Libya, Oman, and Syria

CIA World Factbook 2017: https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.htmlWorld Bank Indicator 2017: https://data.worldbank.org/indicator/NY.GDP.MKTP.CD

N/D N/D N/D N/D

60

61

Various data estimates unavailable for Bahrain, Libya, Oman, and Syria

CIA World Factbook 2017

World Bank Indicator 2017

IMF 2018

Qatar Kuwait UAESaudi Arabia

Bahrain Oman IranLebano

nIraq Algeria Egypt Tunisia Jordan

Morocco

Libya Yemen Syria

CIA GDPPC 124900 69700 68200 55300 51800 45000 20000 19500 17000 15100 13000 12000 12500 8600 9800 2300 2900

World Bank GDPPC 127480 72264 72399 54416 0 0 19948 14308 17348 15013 11129 11595 9047 7857 0 2507 0

IMF GDPPC 129360 71930 69900 55850 52720 46630 20940 20000 17390 15270 13530 12460 12760 8950 12960 2480 0

0

20000

40000

60000

80000

100000

120000

140000

US D

olla

rs

GDP Per Capita Estimates: MENA Region ( PPP in $US using Multiple Indicators)

N/DN/D N/D N/D

N/D

GNI per Capita PPP terms, MENA Region

Qatar Kuwait UAESaudi Arabia

Oman Bahrain Libya Lebanon Iraq Iran Algeria Jordan Tunisia Egypt Morocco Syria Yemen

GNI/ Capita 119,029 85,820 58,068 52,109 42,191 32,072 21,666 16,263 14,007 13,451 12,555 11,337 10,440 10,400 6,905 5,771 3,945

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

PPP GNI is gross national income (GNI)

converted to international dollars using

purchasing power parity rates.

Source: United Nations Development Program- Human Developments Report, 2013

http://hdr.undp.org/en/content/gni-capita-ppp-terms-constant-2011-ppp62

Key Economic Pressures

• Per Capita income is not rising to meet expectations; government blamed.

• Low comparative rates of development.

• Poverty Issues. Limited oil income – “wealth” – per capita.

• Major income disparities. Loss of status, exclusion from Middle Class.

• Price and inflationary shock at all levels of income. Recent spikes in food and energy prices.

• Mismanagement of excessive state sector and government interference and favoritism.

• Failed industrial base development and diversification;

• Inefficient and overstressed agricultural sector. Water.

• Uncertain subsidy affordability and impact.

• Significant numbers at or below a poverty line of $1-2 a day in family income

63

Key Missing Index: Gini Index

Credit Suisse, Credit Suisse Research Institute, Global Wealth Databook 2012. p. 93-96. Accessed August 8, 2013

https://publications.credit-suisse.com/tasks/render/file/index.cfm?fileid=88EE9D2B-83E8-EB92-9D5E0AB7A9A266A9

The GINI Index is a measure of statistical dispersion that measures income inequality. The index is measured

between 0% and 100%. 0% indicates a society in which all individuals have the same income, 100% indicates that

all national wealth is concentrated into one individual

Algeria Bahrain Egypt Iran Iraq Jordan KuwaitLebano

nLibya

Morocco

Oman QatarSaudiaArabia

Syria Tunisia UAE Yemen

Gini Index 65.6 59.1 80.4 66.9 0 65.9 73.7 85.7 77.7 79.6 70.8 70.6 79.2 66.1 68.3 89.2 66.9

0

10

20

30

40

50

60

70

80

90

100

Gin

i In

de

x V

alu

es

(%)

64

Percentage of Population Dissatisfied

with Standard of Living

Arab Development Report 2016, p. 260 65

Excessive Public Sector Employment(Average employment shares in the public sector in selected Arab countries and selected

comparator countries in the 2000s )

Arab Development Report 2016, p. 29 66

Lag in Employment and Cause

Arab Development Re[ort 2016, p. 263 67

Rankings: Ease of Doing Business MENA Region, 2017

Source: World Bank Group

http://www.doingbusiness.org/rankings

Kuwait Bahrain UAEMorocc

oOman Qatar Tunisia

Saudi

ArabiaJordan Iran Egypt

Lebano

nAlgeria Iraq Syria

Afghani

stanLibya Yemen

Rank 3.5 4.5 21 69 71 83 88 92 103 124 128 133 166 168 174 183 185 186

0

20

40

60

80

100

120

140

160

180

200

68

The Expatriate Challenge(Distribution of employment by sector and nationality in the GCC )_

Arab Development Report 2016, p. 79 69

Population Pressure

and the “Youth

Bulge”

70

Demographic Pressures

• Massive population growth since 1950, and will continue through at least 2030.

• Matched by dislocation, hyperurbanization, and DP/IDP issues.

• Major “youth bulge” and pressure on employment, education, services, governance, and infrastructure.

• Need to focus on jobs and income for native labor, restrict expatriates, immigration,

• Changes in sectarian, demographic mix, and presence.

• Broad pressure on agriculture at time need economies of scale and capital – not more farmers.

• Strain on all government services and infrastructure.

• Cannot afford to increase government and state sector jobs.

• Challenge of expectations, status as important as classic economic pressures.

71

The Global Impact of Islam: 2010-2050

Source: the Pew Research Center, The Future of World Religions: Population Growth Projections, 2010-2050, April 2, 2015, http://www.pewforum.org/2015/04/02/religious-projections-2010-2050/.4/8/2018 72

Source: United States Census Bureau, International Data Base, Accessed March 2018. http://www.census.gov/population/international/data/idb/informationGateway.php

73

80,879

118,950

180,448

269,733

366,938

403,604

482,825

644,364

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

1950 1965 1980 1995 2010 2015 2025 2050

Po

pula

tio

n (

Th

ousa

nd

s)MENA Population (Thousands) 1950 - 2050

From 1950 to 1980 = Population Increase X2.23

From 1950 to 2015 = Population Increase X5

From 1950 to 2050 = Population Increase X7.96

Source: United States Census Bureau, International Data Base, Accessed March 2018. http://www.census.gov/population/international/data/idb/informationGateway.php

74

Algeria Libya Morocco Tunisia

1950 8,893 961 9,343 3,517

1965 11,963 1,624 14,066 4,566

1975 16,140 2,568 17,687 5,704

1985 22,008 3,660 21,644 7,368

1995 28,322 4,584 26,148 8,999

2005 32,918 5,570 29,901 10,030

2015 39,542 6,412 33,323 11,162

2025 45,841 7,375 36,484 12,115

2035 50,118 8,138 39,148 12,496

2045 53,894 8,747 41,230 12,671

2050 55,445 8,971 42,026 12,679

0

10,000

20,000

30,000

40,000

50,000

60,000

Po

pula

tio

n (

Th

ousa

nds)

Multiplication factors = Change in population from 1950 to 2015

Morocco

X3.57

Tunisia

X3.14

Algeria

X4.45

Libya

X6.67

Demographic Pressure in North Africa 1950-2015

in 1,000s

Source: United States Census Bureau, International Data Base, Accessed April 2015. http://www.census.gov/population/international/data/idb/informationGateway.php

75

Gaza Strip Israel Jordan Lebanon Syria West Bank Egypt

1950 245 1,286 561 1,364 3,495 771 21,198

1965 350 2,572 1,068 2,058 5,322 861 30,265

1975 395 3,341 1,822 2,692 7,398 806 36,952

1985 532 4,049 2,669 3,177 10,479 1,044 50,052

1995 886 5,335 4,249 3,672 14,487 1,621 58,945

2005 1,350 6,726 5,363 4,139 18,614 2,247 72,544

2015 1,869 8,049 8,118 6,185 17,065 2,785 88,487

2025 2,350 9,305 8,320 5,397 24,538 3,328 103,742

2035 2,778 10,588 9,638 5,624 27,563 3,827 118,256

2045 3,201 11,818 10,857 5,674 30,173 4,225 131,822

2050 3,393 12,365 11,411 5,621 31,226 4,376 137,873

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Po

pu

lati

on

(in

Th

ou

san

ds)

Demographic Pressure in Arab-Israeli Countries: 1950-2050

(in Thousands)

Multiplication factors represent the change in population from 1950 to 2015

Gaza Strip

X7.63

Jordan

X14.47

Israel

X6.26

Lebanon

X4.53

Syria

X4.88West Bank

X3.61

Egypt

X4.17

Bahrain Iraq Kuwait Oman Qatar Saudi Arabia UAE Yemen Iran

1950 115 5,163 145 489 25 3,860 72 4,777 16,357

1965 191 7,971 476 682 70 5,327 144 6,510 25,040

1975 259 11,118 1,007 920 165 7,208 523 7,934 33,467

1985 423 15,694 1,733 1,497 342 13,330 1,363 10,540 48,619

1995 582 19,658 1,664 2,139 510 18,755 2,458 14,832 64,217

2005 916 27,538 2,257 2,697 973 23,642 4,087 20,003 72,283

2015 1,347 37,056 2,789 3,287 2,195 27,752 5,780 26,737 81,824

2025 1,580 47,657 3,169 3,981 2,563 31,877 7,063 32,822 90,481

2035 1,700 59,262 3,482 4,601 2,574 35,614 7,773 38,437 95,772

2045 1,806 70,923 3,751 5,147 2,548 38,781 8,024 43,709 99,181

2050 1,847 76,519 3,863 5,402 2,559 40,251 8,019 46,081 100,045

-

20,000

40,000

60,000

80,000

100,000

120,000

Po

pu

lati

on

(in

Th

ou

san

ds)

Demographic Pressure in Gulf Countries: 1950-2050

(in Thousands)

Multiplication factors represent the change in population from 1950 to 2015

Source: United States Census Bureau, International Data Base, Accessed April 2015. http://www.census.gov/population/international/data/idb/informationGateway.php

76

Bahrain

X11.71

Iraq

X7.18

Kuwait

X19.23

Oman

X6.72

Qatar

X87.8

Saudi Arabia

X7.19

UAE

X80.28

Yemen

X5.6

Iran

X5.0

Youth Bulge and Employment

• Number of men and women entering and in labor force exceeds demand.

• Regional youth unemployment ratios some of worst in the world: Average 30% by UNDP estimate.

• Extensive additional disguised (non-productive unemployment

• Long lags in employment regardless of education.

• Tension with expatriate labor

• Adds to gender, sectarian, ethnic tensions.

• Poor promotion and career prospects.

• Resent privilege, cronyismism, nepotism, corruption.

• Turn away from secular society to religion?

77

Total and Youth Unemployment Rates by Region

Before 2011 (2008): The Threat From POAYMs

Source: IMF, World Economic and Financial Surveys, Regional Economic Outlook, Middle East and Central Asia, October 2010, p. 38

REGIONAL ECONOMIC OUTLOOK: MI DDLE EAST AND CENTRAL ASIA

38

and participation rates in tertiary education

exceed 25 percent in Egypt, Jordan, Lebanon,

and Tunisia. Yet, entrepreneurs regularly cite the

lack of suitable skills as an important constraint

to hiring (Figure 3), and unemployment rates

are highest among the most educated. Taken

together, this suggests that education systems in

the region fail to produce graduates with needed

skills.

Labor market rigidities. According to the latest

Global Competitiveness Report, hiring and fi ring

regulations in most MENA6 countries are more

restrictive than those in the average emerging and

developing country. Moreover, data from enterprise

surveys indicate that, worldwide, the percent of fi rms

identifying labor regulation as a major constraint to

their business operations is, on average, greatest in the

MENA6 (Figure 4). Such rigidities limit employment

creation by discouraging fi rms from expanding

employment in response to favorable changes in the

economic climate.

Large public sectors. In the MENA6, the public

sector has been an extraordinarily impor tant

source of employment. Around the turn of this

century, the public sector accounted for about

one-third of total employment in Syria, 22 percent

in Tunisia, and about 35 percent in Jordan and

Egypt. Public-sector employment shares are

to outpace most other regions. The number

of labor force entrants remains daunting—

approximately 10 million new entrants are expected

to join the labor force in the coming decade ,

compared with 13½ million in the previous decade .

As such, demographic pressures will remain high.

Skill mismatches. The MENA6 countries have

made important strides in providing education.

Primary enrollment rates range from 88 percent

in Lebanon and Egypt to 98 percent in Tunisia,

MENA6

Central and

South-Eastern

Europe(non- EU)

and CIS

Sub-Saharan

Africa

Latin America

and the

Carribean

Developed

Economies and

EU

World

South-East Asia

and the

Pacif ic

South Asia

East Asia

5

7

9

11

13

15

17

19

21

23

4 6 8 10

Yo

uth

un

em

plo

ym

en

t (P

erc

en

t)

Total unemployment rate (Percent)

Figure 2

Total and Youth Unemployment Rates by Region1,2

(20083)

Sources: National authorities; IMF, World Economic Outlook; staf f

estimates; and International Labor Organization.1Unemployment rate for Morocco reflects data from Urban Labor Force Survey .2Youth unemployment estimate for MENA6 excludes Jordan.3Or most recent year for which data are available.

Source: World Bank, Enterprise Survey Results.

Figure 3

Firms Identifying Labor Skill Level

as a Major Constraint(Most recent; percent)

3836

33 31 31 30

21 2119 18 18

11

0

5

10

15

20

25

30

35

40

LB

N

SY

R

JOR

MA

R

EG

Y

La

tin A

m.

& C

ari

b.

Wo

rld

E. A

sia

& P

aci

fic

E.

Eur

uoe

& C

en

tr. A

sia

So

uth

Asi

a

Su

b-S

aha

ran

Afr

ica

OE

CD

Figure 4

Firms Identifying Labor Regulations

as a Major Constraint(Most recent; percent)

Source: World Bank, Enterprise Survey Results.

38

34

27

1816

14 14 13 12

10 9 9

0

5

10

15

20

25

30

35

40

LBN

SY

R

EG

Y

La

tin A

m.

& C

arib

.

MA

R

E. A

sia

& P

acifi

c

JOR

So

uth

Asi

a

Wo

rld

OE

CD

E.

Eur

uo

e

& C

en

tr. A

sia

Su

b-S

aha

ran

Afr

ica

78

Comparative Arab Youth Unemployment(Youth unemployment rate (% of total labor force ages 15–24, modelled ILO

estimate), 1991– 2013 )_

Arab Development Report 2016, p. 79 79

The “Youth Bulge”(Percentage of Native Population Below 25 years in 2017)

Source: Central Intelligence Agency, Accessed March 2018, https://www.cia.gov/library/publications/the-world-factbook/ 80

Qatar UAE Bahrain Iran Tunisia Kuwait LebanonMorocc

oLibya Algeria

SaudiArabia

Oman Syria Egypt Jordan Iraq YemenAfghanis

tan

Ages 15-24 12.35 13.51 15.65 14.69 13.88 15.1 16.42 17.04 17.09 15.3 18.57 18.69 19.54 18.94 20.07 19.25 21.21 22.22

Ages 0-14 12.63 21.01 19.08 24.19 25.15 25.02 24.09 25.77 25.84 29.31 26.1 30.1 31.62 33.29 34.68 39.46 39.83 40.92

0

10

20

30

40

50

60

70

Per

cen

tage

of

To

tal P

op

ula

tio

n

Qatar Bahrain UAELebano

nIran Kuwait Tunisia

Morocco

LibyaSaudi Arabia

Algeria Oman Syria Egypt Jordan Iraq YemenAfghani

stan

Ages 0-14 12.63 19.08 21.01 24.09 24.19 25.02 25.15 25.77 25.84 26.1 29.31 30.1 31.62 33.29 34.68 39.46 39.83 40.92

0.00%

500.00%

1000.00%

1500.00%

2000.00%

2500.00%

3000.00%

3500.00%

4000.00%

4500.00%

Ages 0-14

CIA World Factbook, 2016. Accessed March 2018

https://www.cia.gov/library/publications/the-world-factbook/

The Shape of Things to Come – for the Next Decade(Percentage of Population Ages 0-14 in MENA Region)

81

Dependency Ratio, by country, MENA region, 2015

UAE Qatar Kuwait Bahrain Oman IranSaudi

ArabiaTunisia Lebanon Libya

Morocc

oAlgeria Egypt Jordan Syria Yemen Iraq

Afghani

stan

Ratio 17.4 17.5 29.8 30.2 32.4 40.2 40.9 45.6 47.3 49.1 51.6 52.7 61.8 66.1 72.8 76.8 77.7 88.8

0

10

20

30

40

50

60

70

80

90

100

Total Dependency Ratio = the number of

dependents, aged 0-14 and over the age of

65, to the total population aged 15-64.

Source: CIA World Factbook, 2015

https://www.cia.gov/library/publications/the-world-factbook/fields/2261.html 82

Potential Support Ratio, by country, MENA region, 2015

UAE Qatar Kuwait Bahrain OmanSaudi

Arabia

Afghanist

anYemen Iraq Jordan Libya Syria Iran Egypt Algeria Morocco Tunisia Lebanon

Ratio 83.4 78.1 37.3 33.1 32.6 23.2 21.2 19.8 18.3 16 15.5 14.3 14.2 12.2 11.2 10.3 9 8.3

0

10

20

30

40

50

60

70

80

90

Source: CIA World Factbook, 2015

https://www.cia.gov/library/publications/the-world-factbook/fields/2261.html

Potential Support Ratio describes the

burden placed on the working population

by the non-working (0-14, 65+) population

83

Major Pressures for

Social Change

84

Social Change, Hyperurbanization, Media, Education

• Hyperurbanization and relocation changes values, patterns of stability and security – infrastructure, dislocation, housing, and community stresses,

• Exposure to global and regional media is beyond government control and steadily raises expectations while criticizing regimes.

• Educational standards may not keep up, but more and more of population has secondary or university education.

• Economic and governance failures challenge secularism, modernization at the popular level.

• Major questions about the role of women, marriage, family stability and security.

85

Key Drivers

• Changing education and role of women,

• Impact of global competition, technology, demand for skills.

• Gross over-saturation of government jobs and state owned enterprises. Poor productivity.

• Failure of “Arab socialism,” Weak industrial sectors.

• Disconnect between neo-Salafi goals, modernization, and development.

• Agriculture too small, labor intensive, lacking in capital, and marketing/distribution.

• Economics, extremism, urbanization break up past social order.

86

Growing Hyper Urbanization: 1950-2030

Source: http://www.citymetric.com/skylines/amazing-map-shows-how-urbanisation-has-accelerated-1950-1709. 87

Percentages of Urbanization in MENA Region, 2017

88Source: CIA, Accessed March 2020. https://www.cia.gov/library/publications/the-world-factbook/fields/2212.html

Qatar Kuwait Israel Bahrain Lebanon UAE JordanSaudi Arabia

Libya Oman Iran Algeria Iraq TunisiaMorocc

oSyria Egypt Yemen

* 99.40% 98.40% 92.30% 88.90% 88.00% 86.10% 84.10% 83.50% 79.00% 78.50% 74.40% 71.90% 69.70% 67.30% 61.20% 58.50% 43.30% 35.80%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

Internet Users in Middle East, by Country, 2017

(millions)

https://www.statista.com/statistics/603061/number-of-internet-users-in-middle-east-countries/

IranSaudi

ArabiaIraq UAE Yemen Israel Jordan Syria Lebanon Oman Kuwait Qatar Bahrain

* 56.7 24.15 14 8.52 6.91 6.64 6.3 6.03 4.6 3.31 3.21 2.2 1.39

0

10

20

30

40

50

60

89

Digital Penetration in the MENA Region: 2012

90Source: World Bank, Broadband Networks in the Middle East and North Africahttp://dx.doi.org/10.1596/978-1-4648-0112-9, p. 24, p. ,

Over-Dependence

On Petroleum

Exports

91

The OPEC Disease and the Illusion of Oil Wealth• Oil income differs radically by exporting state, and even

more so in terms of net per capita income – the real

measure of wealth.

• Most states concentrate income in their elite, consume

large amounts rather than invest, and expand the state

sector to create low productivity jobs.

• Distribution often varies sharply by region, ethnicity, and

sect. Concentration at the top feeds corruption.

• Population increases and waste consume steadily larger

portions of production domestically.

• Development, production and transport cost rise faster in

real terms

• Many petroleum exporting countries end up as rentier

states with distort economies, limited job creation, and

limited per capita income92

Total Petroleum Export Revenues (in Current $U.S. Millions)

Source: OPEC, https://asb.opec.org/index.php/data-download

Where applicable, petroleum product exports are included. Data for some countries may include condensates, as well as other NGLs;

93

The Real World Limits to Oil Wealth(Net Oil Export Revenues in Current $U.S. Billions)

Source: US Department of Energy, Energy Information Agency, https://www.eia.gov/todayinenergy/detail.php?id=31292 94

The Oil Shock in 2012-2016(Total Petroleum Export Revenues in Current $U.S. Millions)

Source: OPEC, https://asb.opec.org/index.php/data-download

Where applicable, petroleum product exports are included. Data for some countries may include condensates, as well as other NGLs;

95

The Limits to “Oil Wealth:” Per Capita Net Oil Export

Income and the Oil Shock in 2012-2016 (In Constant $US 2016)

Source: EIA, OPEC Revenues Fact Sheet, May 15, 2017, https://www.eia.gov/beta/international/regions-topics.cfm?RegionTopicID=OPEC. 96

Non-Petroleum GDP Per Capita Income(In t $US 2015)

Source: McKinsey, Digital Middle East: Transforming the region into a leading digital economy, October 2016, https://www.mckinsey.com/~/media/mckinsey/global%20themes/middle%20east%20and%20africa/digital%20middle%20east%20transforming%20the%20region%20into%20a%20leading%20digital%20economy/digital-middle-east-final-updated.ashx

97

Other Slides

4/8/2018 98

Yemen SyriaMorocc

oLibya Tunisia Jordan Egypt Algeria Iraq Lebanon Iran Oman Bahrain

Saudi

ArabiaUAE Kuwait Qatar

* 2300 2900 8600 9800 12000 12500 13000 15100 17000 19500 20000 45500 51800 55300 68200 69700 124900

0

20000

40000

60000

80000

100000

120000

140000

GDP per Capita MENA Region in 2017

(PPP purchasing power parity, $US )

CIA World Factbook, 2018 99

Public Sector Bias in Seeking Employment

Arab Development Re[ort 2016, p. 262 100

Perceptions of Quality of Life and Governance

Arab Development Report 2016, p. 245 101

Detailed Population Trends

Arab Development Report 2016, p. 245

102